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Debates on the Measurement of Global Poverty$
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Sudhir Anand, Paul Segal, and Joseph E. Stiglitz

Print publication date: 2010

Print ISBN-13: 9780199558032

Published to Oxford Scholarship Online: May 2010

DOI: 10.1093/acprof:oso/9780199558032.001.0001

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Use of Country Purchasing Power Parities for International Comparisons of Poverty Levels: Potential and Limitations

Use of Country Purchasing Power Parities for International Comparisons of Poverty Levels: Potential and Limitations

Chapter:
(p.154) 6 Use of Country Purchasing Power Parities for International Comparisons of Poverty Levels: Potential and Limitations
Source:
Debates on the Measurement of Global Poverty
Author(s):

Bettina Aten

Alan Heston

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199558032.003.0008

This chapter takes up two interrelated issues of monetary measures of poverty: what prices and what expenditure weights should be used when comparing the purchasing power parity of currencies. The first section evaluates methods of estimating poverty through the late 1990s. The second looks at the sensitivity of an international poverty PPP to alternative aggregation and weighting methods. Some of the conclusions are that a consumption-based PPP is preferable to any GDP-based PPP, as are percentage weights rather than actual weights for expenditure distributions. The latter should be adjusted using an iterative approach that combines own country average-income shares and low-income household expenditure shares, or at least representative shares of a low-income country. Lastly, references to these methods are made with respect to the differences in the poverty PPPs, and global poverty counts of the World Bank and of Deaton and Dupriez (2009).

Keywords:   purchasing power parities, average income shares, aggregation methods, expenditure distributions

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